BOND VALUATIONS In the problems below, all coupon and yield rates are quoted as nominal rates payable semiannually (so r(2) and j(2) respectively). Use the following convention: the issue date is t = 0 and the first coupon payment occurs at t 1; t is measured in 1's of a year. If not specified otherwise, P refers to the price of the bond at the issue date t=0. Consider a bond A maturing in 8 years and having the face value of $100, coupon rate of 5% and the yield rate of 6%. (a) Find the current fair price P of bond A. Now consider bond B that has the same current fair price, maturity and the coupon rate as bond A above. (b) If bond B has the yield rate of 7%, what is the face value of bond B? 1 BOND VALUATIONS In the problems below, all coupon and yield rates are quoted as nominal rates payable semiannually (so r(2) and j(2) respectively). Use the following convention: the issue date is t = 0 and the first coupon payment occurs at t 1; t is measured in 1's of a year. If not specified otherwise, P refers to the price of the bond at the issue date t=0. Consider a bond A maturing in 8 years and having the face value of $100, coupon rate of 5% and the yield rate of 6%. (a) Find the current fair price P of bond A. Now consider bond B that has the same current fair price, maturity and the coupon rate as bond A above. (b) If bond B has the yield rate of 7%, what is the face value of bond B? 1